Investment X and Investment Y Are Both Growing Perpetuities with Initial

question 60

Multiple Choice

Investment X and Investment Y are both growing perpetuities with initial cash flow of $100.Both investments have the same interest rate (r) .The present value of Investment X is $5,000,while the present value of Investment Y is $4,000.Which of the following is true?

• A)Investment X has a higher growth rate than Investment Y.
• B)Investment X has a lower growth rate than Investment Y.
• C)The answer cannot be determined without knowing the interest rate for both investments.
• D)This makes no sense - with the same initial cash flow and the same interest rate Investment X and Investment Y should have the same present value.

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Definitions:

Soviet Policy

The political strategy or principles governing the Soviet Union, particularly during the Cold War era, including approaches to economy, international relations, and internal governance.

Communist Orthodoxy

The strict adherence to the principles and doctrines of classical Marxism-Leninism within communist ideologies and practices.

Mass Gulag

Refers to the extensive network of forced labor camps operated by the Soviet Union under Stalin, where political prisoners and others were detained.

Nationalist Rebellion

A revolt or an uprising by a group seeking to achieve political independence, sovereignty, or self-determination for their nation or ethnic group.